Monday, November 7, 2011

Grading Slive on Expansion

With the SEC's addition of Missouri, I go back and forth on what I think of Slive's handiwork. My strong preference initially was for Virginia Tech to join as the league's 14th member. Geographically, I felt that made more sense. However, the Missouri addition does have merit in terms of football and men's basketball. More importantly, it made sense from a financial standpoint.

Slive has added the following TV markets (by national rank*):
    #5 Dallas/Ft. Worth
    #10 Houston
    #21 St. Louis
    #31 Kansas City
    #37 San Antonio
Said differently...the SEC added 31 million more potential viewers in the states of Texas and Missouri...or almost 10 percent of the US population.

From a TV standpoint, it should be a win. The rumored move from eight conference games across 12 teams to 9 games across 14 teams means a 31% increase in quality SEC conference games for the league's TV partners.

The additional TV sets should mean a massive renegotiation for the SEC and it's TV friends. How much more?

The SEC's current TV deal pays the league $200 million per team. The Pac 12 deal pays $250 million per year to its members. It's not an apples to apples comparison as schools like UGA and UF have side deals for multimedia rights that pay millions per year above and beyond the TV deal. However, the Pac 12 deal is a good starting point for looking at financial opportunity for the SEC in expansion.

With the increase in game inventory and TV sets, it's not unreasonable to think the SEC can get to $300 million per year (a 29% spike in revenues).

With equal revenue sharing, the SEC's deal needs to at least jump from $200 million to $233.3 million just to break even given that we're going from splitting the pie 12 ways to 14 ways.

All of this distrupution wouldn't have made sense if all we were going to do was tread water financially. Slive needs to come back with something in the neighborhood of a 30% bump in TV revenue per school to have made this worth the effort. do we grade Slive? We'll have to see the new TV deal before we pass judgement.


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